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India greenlights BPCL’s Mozambique

LNG plans, but with a caveat

PROJECTS & INDIA’S government has reportedly authorised
COMPANIES a Bharat Petroleum Corporation Ltd (BPCL)
subsidiary to proceed with investment in the
Mozambique LNG project, despite lingering
questions about the company’s decision to
buy a stake of less than 20% in the French-led
consortium.
Sources told PTI last week that New Delhi
had given Bharat PetroResources Ltd (BPRL),
the upstream affiliate of BPCL, a green light to
move forward with the project, which calls for
extracting natural gas from Area 1, located off-
shore Mozambique, and using it as feedstock CEO, Venugopal Dhoot, with corruption in con-
for an LNG plant. As a result, they said, BPRL nection with the financing of the Mozambique
is now clear to contribute its share of funding to LNG stake purchase.
Mozambique LNG, which is expected to carry a As of press time, neither BPRL nor its par-
price tag of $24bn. ent company BPCL had commented on the
They also noted, though, that India’s Central CBI’s concerns – or on New Delhi’s decision to
Bureau of Investigation (CBI) intended to look approve its investment in Mozambique LNG.
into alleged irregularities in BPRL’s acquisition
of its 10% stake in the consortium in 2008. The Long-term LNG supply deal
bureau will examine the question of why the BPCL recently confirmed that it had signed a
company did not accept an offer from Anadarko long-term supply deal with Mozambique LNG.
Petroleum (US) to buy 20%, they said. CBI offi- Late last month, the company’s CEO, Neelakan-
cials are also seeking to determine why BPRL did tapillai Vijayagopal, told reporters that the con-
not team up with other state-run Indian firms sortium would be delivering at least 1mn tonnes
such as ONGC Videsh Ltd (OVL) in order to per year (tpy) of LNG to BPCL over a period of
share the risk involved in taking a larger stake, 15 years. Shipments will begin after Mozam-
they added. bique LNG’s first train comes on stream in 2024,
he said.
Questions about Videocon Vijayagopal described the deal as advanta-
Indian authorities appear to have reservations geous on several fronts. “We have a total require-
about the role Videocon, an Indian manufac- ment of [more than] 1mn tpy of gas as of now,
turer of televisions and other durable consumer and we plan to grow it to 2mn tpy this year. The
goods with no experience in the oil and gas sec- 1mn tpy gas we will get from Mozambique will
tor, has played in the Mozambique project. be very beneficial for us,” he said. “Also, since our
When BPRL opted to buy only half of the 20% contract with Qatar will [be] over in 2027, it will
stake offered by Anadarko in 2008, Videocon help to compensate for that. Logistics-wise also,
bought the other 10% and then sold the stake on it is closer to other locations, as it is just across the
to OVL for $2.475bn in 2013. (OVL later sold Indian Ocean.”
4% to state-owned Oil India Ltd, or OIL.) Vid- Mozambique LNG is led by the French major
eocon also agreed to team up with BPRL to buy Total, whose subsidiary Total E&P Mozambique
into a Brazilian project led by EnCana (Canada) Area 1 has a 26.5% stake in the consortium. The
around the same time. remaining equity in the group is split between
Both moves led observers to express concerns two Japanese companies, Mitsui and Japan Oil,
about the ties between BPRL and Videocon. Gas and Metals National Corp. (JOGMEC),
With respect to Mozambique LNG, industry with 20%; BPRL, with 15%; Beas Rovuma
analysts pointed out that OVL might not have Energy Mozambique, a 60:40 joint venture
had to pay so much for its stake if it had been between OVL and OIL, with 10%; Mozambique’s
allowed to join the project earlier, when global national oil company (NOC) ENH, with 10%;
oil and gas prices were lower. As for the Brazilian and PTTEP (Thailand), with 8.5%.
field, experts questioned the BPCL subsidiary’s The partners are building a gas liquefaction
willingness to partner with a company that was plant on the Afungi Peninsula. This onshore
new to oil and gas. facility will process natural gas from Area 1,
Eventually, the Indian Ministry of Petroleum which lies offshore in the Rovuma Basin, and
and Natural Gas lodged a complaint against Vid- turn out 12.88mn tpy of LNG. It will eventually
eocon. In June of this year, CBI responded to the have two production trains, each with a capacity
ministry’s complaint by charging the company’s of 6.44mn tpy.™

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